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Friday, April 25, 2014
Embattled Bitcoin Exchange Mt. Gox to Liquidate Following Pressure in U.S. Chapter 15 Case
Mt. Gox is headed to liquidation. Mt. Gox is a Japanese Bitcoin exchange that misplaced $620 million in Bitcoins. It commenced civil rehabilitation proceedings in Japan (similar to a reorganization under chapter 11 of the Bankruptcy Code) and filed a case under chapter 15 of the Bankruptcy Code in Texas. Later, Mt. Gox found $116 million of the missing Bitcoins.
Mt. Gox’s civil rehabilitation proceeding was dismissed on April 16, 2014. A liquidation under Japanese law has begun, and an interim administrator has been appointed.
This move to liquidate began in the U.S., where the bankruptcy court ordered CEO Mark Karpeles to appear in Texas and testify as to statements made in the documents commencing the chapter 15 case. Also, the Treasury Department’s Financial Crimes Enforcement Network summoned him to appear and testify in Washington DC.
Mt. Gox expressed concern that the chapter 15 case might be dismissed if Karpeles remained in control of the company and refused to testify, as he had decided. Accordingly, the Japanese proceedings were shifted to a liquidation and an interim administrator was appointed. The U.S. bankruptcy judge has encourages the interim administrator to participate in the chapter 15 proceedings and postponed the date for Karpeles’s testimony to a date to be determined.